Despite what you might have heard recently, as it turns out, periods of low volatility are not particularly unusual.

Have a look at the chart nearby. It comes to us from Goldman Sachs via FT Alphaville[2], and it shows that spikes in volatility are quite unusual. Periods of low or falling vol is what seems to fill the time between volatility spikes. Its like plains of tall grass between the occasional redwood tree.

I have no idea what this means for the markets for the next week or month. However, it does suggest that an overemphasis on either the so-called fear index or complacency could be wildly overdone.